America Feels the Squeeze

02 April 2013

North America towers above the rest of the world in terms of juice consumption, being responsible for over a third of global volumes. However, the market is fighting hard to grow and is losing share within the region’s overall soft drinks arena. Today, the juice category is well down on ten years ago and per capita consumption is continually contracting. A decade ago volumes easily exceeded ten billion liters but currently they are struggling to maintain a level of eight billion liters. Juice faces a mixed reception. On the one hand it meets growing health and nutritional needs, but at the same time consumers are worried about its calorie and sugar content and are often further deterred by the product’s acidity. The category also faces the issue of fluctuating concentrate supplies and rising prices thereby increasing the attractiveness of nectars and other cheaper drinks.

In North America, over half of all juice volumes continue to be chilled, but the contribution made by this segment is tending to slowly shrink over time. Chilled products are often perceived as providing better quality, but also come with a higher price tag. This had impacted unfavorably in these tough economic times and allowed cheaper ambient juices to steal some share. Despite its inconvenience factor, frozen juice has also shown signs of increased popularity within budget conscious households.

Some consumers are also switching from more expensive single juice flavors to lower cost juice blends. But, according to Canadean, the leading authority on the international beverage industry, orange, followed by apple, remain as the most popular choices across the region. The substantial increases in consumer prices for orange juice may have dented demand but they have failed to knock it from its leading flavor position. Despite the adventurous palate of the modern day consumer, almost half of category volume remains as orange juice with apple responsible for an additional15-20% of volumes.

As might be expected, Private Label products have tended to attract increasing attention as family budgets have come under closer scrutiny. Having dipped below 17% of category volumes in more affluent times, according to Canadean research, their share has subsequently crept back up. Private Label juices are no longer blandly packed, limited range offerings of perceived inferior quality. Leading retailers now provide diverse flavors of ‘freshly squeezed’, ‘high fiber’’ and even organic products presented in a plethora of eye-catching cartons and bottles. However, there is now evidence to suggest that consumers appear to be turning away from Private Label juices in favor of cheaper nectars and still drinks. Indeed, some consumers seem unable to make a distinction between pure juice and products with lower juice content. From a retailer point of view, juice based drinks also provide greater opportunities for long-term profitability.

In recent years the North American juice category has suffered, on the one hand by consumers trading down, and on the other by a reduction in investment, both brought on by the global recession. Cost pressures are predicted to ease as commodity prices diminish, but, according to Canadean, future market prospects do not appear promising.